First-time buyers fail to protect against loss of income

22 August 2006

Nearly half of first-time buyers don’t have any kind of protection against loss of income, according to new research – leaving them open to mortgage arrears and repossessions.

The Post Office Financial Services survey found that 45% of first-time buyers questioned hadn’t taken out income protection insurance, in case of accident, sickness or unemployment. Researchers also discovered that 48% of first-time buyers who responded would only be able to meet their mortgage repayments for six months if they lost their job tomorrow.

Of those who weren’t protected, the majority – 44% – said they’d avoided doing so because it was too expensive. Almost a third didn’t think they needed it. One in five first-time buyers – 21% – said they’d rely on friends and family to help them pay their mortgage if they lost their job or couldn’t work. One in twenty said they’d simply have to sell their property.

Claire Oldstein, who’s head of marketing at the Post Office, sounded a warning note. She said: “First-time buyers tend to overstretch themselves, but need to consider what they would do if they lost their income. It is unlikely they will have a big enough rainy day fund to rely on – especially after pulling together a deposit.”